OPINION: “Powell says that the economy is strong and that everyone can tolerate the Fed’s anti-inflation medicine. But I think that’s bluster. Underneath the surface, the foundation looks weak,” columnist Rex Nutting writes.
Even as the government reports the fastest economic growth in nearly 40 years, the historic gains in income and wealth that inflated the economy in 2020 and 2021 are fading fast.
And now the Federal Reserve is telling us clearly that the Era of Free Money is over. Fed Chair Jerome Powell just announced last call. The punch bowl isn’t going to be refilled this time. It’s closing time at the Central Bank Saloon. COVID also twisted the usual spending patterns. With less access to face-to-face services such as travel, entertainment and recreation, people naturally bought more stuff—durable goods—to replace the services they craved but could no longer enjoy.
Workers managed to save some of the windfall that Congress provided earlier, but they’ll soon run through that. Then hunger and the need to put a roof over their heads will bring millions back into the labor force, resigned to take any job, no matter how unsafe, inhumane or poorly paid. It will give new meaning to the phrase “The Great Resignation.”
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